Starting and growing a business takes capital. Even the most bootstrapped startups require some initial investment to get off the ground. Once launched, companies constantly need working capital to cover payroll, inventory, equipment, marketing efforts, and other operating expenses required to grow the business.
Traditional banks are often reluctant to provide loans to new or small businesses, especially those without significant assets or revenue history to secure the loan against default. However, several alternative lending options have emerged to provide business funding loans to companies that can’t qualify for traditional financing.
What Are Business Funding Loans?
Business funding loans provide capital to companies that don’t qualify for traditional bank loans. Also known as alternative or non-bank loans, they come from online lenders, merchant cash advance companies, and other private capital sources.
Rather than relying solely on assets and credit scores, alternative lenders evaluate applicants based on projected cash flow, sales volume, time in business, and other real-time data points. This allows them to extend credit to newer or smaller businesses that traditional banks deem too risky.
Types of Business Loans
Several types of business funding loans exist to meet different capital needs:
These provide a lump sum of capital repaid over several months or years at a fixed interest rate. Term loans allow you to access a large amount of capital upfront for business growth and expansion.
Lines of credit
Revolving credit lines provide flexible access to capital as needed, up to a maximum limit. Only interest accrues on the amount borrowed. Lines of credit are useful for managing cash flow fluctuations.
Merchant cash advance
Advance lenders provide an upfront lump sum in exchange for a percentage of your future credit card or debit card sales. There’s no fixed repayment schedule. You repay as a percentage of daily card receipts until the advance is paid off.
Funding is provided based on your outstanding customer invoices. The lender advances a percentage of unpaid invoices, then collects the full amount from your customers. Fees are deducted from the balance when invoices are paid.
How To Apply
The application process is simple for most alternative lending sources. You’ll need to provide basic information about your business and its finances, including:
- Business registration documents
- Bank statements
- Tax returns
- Sales figures
- Outstanding invoices/accounts receivable
- Inventory value
- Projections and forecasts
Lenders use this to quickly assess risk and eligibility. Many provide prequalification tools online so you can get an instant decision prior to a full application.
The Advantages of Alternative Lending
For businesses that don’t qualify through traditional banks, alternative lending provides fast access to growth capital with minimal paperwork. Alternative lending offers easy online applications that can be completed quickly. Decisions are made rapidly, so businesses don’t have to wait long to hear if they are approved.
Funding comes through in just days or weeks, much faster than with traditional lending. The underwriting process is flexible, focusing on cash flow rather than strict credit requirements. This allows for ongoing funding as the business grows and needs more capital.
The speed, flexibility, and accessibility of alternative lending are key advantages for businesses that may not qualify for loans through traditional banks.
Get the Business Funding Loans You Need to Grow
The right funding partner can be indispensable for any stage of business. Evaluate both traditional and alternative lenders to find the best financing options to meet your capital needs. With quick applications, fast approvals, and funding in days or weeks, alternative lending provides a nimble financing solution for businesses not served by traditional banks; the speed, flexibility, and accessibility make it an indispensable option for any business seeking capital to grow.